India’s internet market has huge potential for growth, especially with new government-mandated protections in place
Data is the oil of the 21st century. A few years ago, Exxon Mobil (XOM) used to be the most valued publicly listed company in the world in terms of market cap. Microsoft, Apple and Google used to be its closest competitors but lagged significantly behind. In the last couple of years, data and technology have finally changed the world order, with Apple, Amazon, Google, Microsoft, Facebook far ahead of Exxon Mobil in terms of market valuation. Further, with the traditional oil market shift towards electric vehicles and computational driving (self-driving cars), right now it is not oil but data that is driving the world’s economy.
After centuries, imperialism and colonialism had given way to dollar diplomacy with oil as the cynosure of warfare and geopolitics in the last fifty years or so. However, with capitalism giving way to market economics, and the digital economy establishing a new world order, we face a paradigm shift in the financial models that will dominate the next two decades. Civilization and history usually repeat themselves in cycles. Until about 250 years back, the Indian economy was the largest – that is, till colonial rule drained it of its wealth. Seventy years after a fresh start with independence, and building up from rock bottom, India is among the top five countries in the world in terms of Gross Domestic Product (GDP). This trend should continue since the Indian economy is growing at a faster rate than all the other major economies in the world.
However, we might be missing out on the most important trend in geopolitics and international trade: digital economics. This will the most important leading indicator of dominance and market position in the coming decades., India has the second-largest digital population in the world after China. While India has over 460 million internet users, China has over 770 million. The United States is in the third position, with more than 310 million internet users.
Clearly, the American digital market is nearly saturated, given that these 310 million people on the internet come from a population of 330 million. There’s little room for growth. It also is home to a digital population whose internet use is most highly monetized.
China has more prospects since internet users make up less than 50 percent of the population. But the closed nature of Chinese economics and its digital population will hobble growth in digital economics for at least the next two decades.
Most big change makers in the area, such as Google, Facebook, Amazon, have faced huge roadblocks in entering the Chinese digital market, and the situation is unlikely to change soon.
That leaves India, with roughly only a third of the population on the internet, and an unmatched growth rate for internet users, one that shows no sign of slowing down for at least another decade. The use of the internet is minimally monetized there. So, together with the volume, growth rate and low monetization saturation, India could become the most important traditional and digital economy in the next two decades.
Image – Countries with highest internet users *statista*
That makes it important to learn lessons from history, particularly that involving Europe. Back when the East India Company visited India in the 1700s, India was the world’s most prosperous economy. However, there was no strategy, organization and budget for defense and protection against foreign invasions. More than 250 different political dispensations dotted the Indian subcontinent, in the forms of disparate kingdoms, with little cohesiveness or order. This resulted in the defeat of a population of 300 million population by a 10,000-strong force equipped with more sophisticated weaponry and organized better than the locals.
We need to learn from history and ensure history is not echoed when negotiating the digital economy. Data is the “Kohinoor” of this era, and we need to ensure that we proactively think about safeguards and the right interfaces to maximize the value of this data.
Europe has done that by working together, dissolving national boundaries and opting for a continental identity in the form of the European Union. This could only happen once they had perfected policy at the national level. This is the next level of evolution – when a country develops to its highest potential. Unsurprisingly, Europe has also taken leading steps in putting together safeguards and appropriate interfaces to handle data, relying on the General Data Protection Regulation (GDPR), a watershed measure in how companies deal with personal data belonging to citizens.
Protecting the sensitivity of Personally Identifiable Information (PII) is vital in ensuring that we avoid an Orwellian dystopia while still using data to ensure explosive monetization and the benefits of artificial intelligence.
The current political dispensation in India, led by Narendra Modi, the digitally savvy prime minister, could ensure that India takes correct, measured steps at this important juncture, taking a leaf from Europe’s GDPR to ensure two things: one, that the Indian digital economy continues to remain open with immense potential for market economics and monetization so that India features in the central plan of companies such Google, Facebook, Amazon, Apple, etc, and becomes the focal point of digital transformation. Two, make sure that the sensitive Personally Identifiable Information of Indian citizens is not compromised and is protected through hard-to-penetrate safeguards. India has already started taking steps in the right direction by working on regulations for data residency. The regulators need to double down on this and ensure that India emulates the GDPR model and thus remains the most attractive digital economy in the next two decades.
State-of-the-art encryption (for data at-rest and in transit) and caps on PII data retention needs to be the cornerstones around which such safeguards are built. Blockchain should also be utilized as the preferred next-generation mechanism and as an alternative to classical cryptography.
[Subhasish Chakraborty is a product manager at Google Cloud]